Media Roundtable: Planning the Next Step

On Feb. 4, six leaders of the media-agency business - five of them members of the American Association of Advertising Agencies' Media Policy Committee - gathered to discuss issues facing the industry, including what magazines need to do to compete against television, why the upfront buying season is like the Olympics and how to fix research. Renetta McCann, CEO of Starcom North America; Carolyn Bivens, president/CEO of Initiative Media North America; Marc Goldstein, president/ CEO of MindShare North America; Rich Hamilton, CEO of Zenith Optimedia, the Americas; Mark McLaughlin, president of FCBi; and Charlie Rutman, president of Carat North America, put their perspectives on the table.

Print vs. television?

RENETTA McCANN: There's a theory that says there are some economic markets where you move to one thing instead of trying to spread your dollars and go for the most efficient thing. You go for the most impactful thing or the one thing that is most in demand. And people are moving towards TV. There still is a priority placed on visual media; there is something about the multisensory encounter with consumers that's more valued. The other thing is - and I've said this directly to the print community so they won't be surprised - some of their practices in terms of how they sell against each other, and they really don't have an opportunity to sell their category, lets the conversation down. There may be too much circulation out there and too many publications.

MARK McLAUGHLIN: There's such tremendous pressure to collapse the time between cause and effect. As soon as you've got a Web site built that has proven that it can pull people into a relationship and get them to transact, you want to turn on media that pops that traffic right away. Print is probably very good at it, but when you aggregate your audience over a six-week period or a 10-day period, it's harder for us to track and say, "See, we did that and this." We run a burst of television advertising and simply because it happened so quickly, we aggregate all those eyeballs. And a small percentage of them off a very mass base react very quickly - we can demonstrate cause and effect. Whether it's people through the door on Saturday or visits to a Web site, we're having a harder time correlating the investment in print to behavioral change, and it has a lot to do with the way they aggregate their eyeballs.

CHARLIE RUTMAN: Television has a marketplace of supply and demand where there is a finite supply. It's not as easily substitutable. In magazines, it's pretty easily substitutable, and there's no such thing as a sell-out. It's the only medium I can think of that doesn't sell out.

RICH HAMILTON: The magazine medium has always been hurt more in bad times than the other media, and it goes back to this whole issue of immediacy.

McCANN: The shame of it is some of them have intensely active and engaged readers. There was a blurb in Oprah's magazine about some Clinique product, [and after it ran] you couldn't find it. I couldn't find it in Chicago. They have great power.

McLAUGHLIN: The slice of a magazine's circulation that is a passionately involved reader that loves that brand is somebody I want to hitchhike on that relationship and transfer to my brand. A lot of their new metrics have to be around their most loyal people who love their brand and how they get them into a more involved relationship that leads to new products and opportunities. It depends on the category, but a magazine like an Esquire, there are people who are very, very involved, who are tearing pages out - "Gee, I'll try that wine!" You love to get into the middle of a relationship like that, but we're lacking the accountability.

RUTMAN: We talked a lot over the years about appointment viewing, and each magazine has its core audience of appointment readers. Extrapolating that from the casual readers, whether it's price or something else, is critical.

Will the upfront ever change?

RUTMAN: The network upfront is treated almost like an Olympic sport. Yeah, it's an important business proposition, but I'm not sure it's in our clients' best interest when you have people sitting at their company at 4 or 5 o'clock in the morning, eating cold pizza, and trying to make hundred-million-dollar decisions. I'm not trying to shift the balance of power from the seller to the buyer or the buyer to the seller. I would like rules of engagement that make it a more businesslike effort - if there were a way to get an industry working group of buyers and clients and sellers to come up with rules of engagement to make it more civil and businesslike. I don't know another buying and selling interaction that occurs like that.

HAMILTON: I would suggest if that ever happened, the first thing that would happen after that is somebody would break the rules in order to get a better deal. There's been talk about the obsolescence of the upfront for 20 years. We're competing against each other, and the clients are competing against other clients, the agencies are competing against other agencies for limited inventory. The broadcast networks increased their share of the total upfront buy in last year's upfront for the first time in I don't know how many years. Notwithstanding all the stuff you read about television and threats to television and everything else, the demand hasn't gone away. And you're not going to sit in a room and agree with each other about what the ground rules should be, because we're out to beat each other.

MARC GOLDSTEIN: We tend to all think - myself included - about the most recent experience. If you just go back one year earlier, our entire staff left at 5 or 6 o'clock at night, worked normal hours and did the upfront over a period of four to five to six weeks (or even eight weeks if you extend it into cable and syndication), because the marketplace conditions were totally different than they were last year. Granted, last year was an exception, even for us. We have always told the networks that we will do business when it's still light out, and there's no reason to work once the lights have to go on in the office and it's dark outside. I grant you last year was not the case. Last year, we reacted to marketplace conditions. Marketplace conditions in an auction environment were such that the marketplace in prime alone went over $8 billion - virtually a 20 percent increase. Who starts that? How does the avalanche or the snowball effect get started? I don't necessarily have an answer for you, but I would suggest that in a strong marketplace, we're going to see that every single year. Similarly, if the demand isn't there, we're going to see markets like we did two years ago, which are going to be protracted and drawn out.

CAROLYN BIVENS: Until media sellers decide that they will allow the resale of the time after it's initially purchased, the upfront isn't going to change. And I would contend that even if they did allow that, it would make for a much more complicated market. In open market conditions, it would be a little more difficult to value.

GOLDSTEIN: Or if the seller said we're going home at 6 o'clock at night, our doors are closed, we're going to be here again at 9 o'clock tomorrow morning, the inventory is there, the price is going to be the same, you will not lose anything between 6 p.m. and 9 a.m. the next morning, the marketplace could potentially operate differently.

McCANN: What's always struck me is it's not in the networks' best interest to change the mechanism.

What is your most pressing research concern?

McLAUGHLIN: Getting the most value out of your advertising - your marketing efforts that bring people into a brand are tied to the moment you bring them in. We see clients starting to emphasize that more and more. I think the car industry has really started to grasp that if somebody owns a car that's your brand and from your company, you have a tremendous data advantage on keeping that person in the fold for the long term, and if you don't take advantage of that, you're making a very big mistake. The more considered the purchase, the more high-interest it is, and the stronger the brand, the more efficiently you can start to do that.

BIVENS: A marketer that looked exclusively at loyalty marketing regardless of the metrics that are being used would be missing out on a lot of other opportunities. There are better and better metrics that are available now. You can do a lot of the modeling. We've taken some of the things we had in Europe and brought them over here - where you can collect information and do predictive marketing.

RUTMAN: We have a guy in Carat U.K. who helped us get into this communications planning, which is happening in our company more in Europe and certainly the United States. His background is sciences of consumer behavior. His name is Dr. Wayne Fletcher, he's a very interesting guy, and he's moved us ahead quite far in Europe, and it's particularly noticeable on three of our clients. We haven't been able to adopt it here yet in the United States. He comes from a totally different background and has now hired a few people. He's done some work with us in the U.S., but it hasn't come to fruition yet.

GOLDSTEIN: We have done research, our own research, in over 12 markets around the world against the youth market. It is not what they watch or what they read; it is more about their level of expectation. It is more along the lines of how they feel and what they think and what their reactions are, rather than how many people are watching and simply counting - as Nielsen might - the rating points against a particular media type. It's much more into their reactions, how they feel, both positively and negatively. Because you really have got to learn and understand this particular group to be able to reach them.

McLAUGHLIN: We've put account planning and data analysts together. One example of a result of that is with a retailer - the television advertising was targeting the people who represent the great majority of volume. After data analysts shared with the planner a lot of new information about the business, we recognized that a very small slice of traffic represented the majority of profit. And the television advertising was changed to create loyalty amongst a niche group of people who go to that retailer because they pay the premium prices.

On Feb. 4, six leaders of the media-agency business - five of them members of the American Association of Advertising Agencies' Media Policy Committee - gathered to discuss issues facing the industry, including what magazines need to do to compete against television, why the upfront buying season is like the Olympics and how to fix research. Renetta McCann, CEO of Starcom North America; Carolyn Bivens, president/CEO of Initiative Media North America; Marc Goldstein, president/ CEO of MindShare North America; Rich Hamilton, CEO of Zenith Optimedia, the Americas; Mark McLaughlin, president of FCBi; and Charlie Rutman, president of Carat North America, put their perspectives on the table.

Print vs. television?

RENETTA McCANN: There's a theory that says there are some economic markets where you move to one thing instead of trying to spread your dollars and go for the most efficient thing. You go for the most impactful thing or the one thing that is most in demand. And people are moving towards TV. There still is a priority placed on visual media; there is something about the multisensory encounter with consumers that's more valued. The other thing is - and I've said this directly to the print community so they won't be surprised - some of their practices in terms of how they sell against each other, and they really don't have an opportunity to sell their category, lets the conversation down. There may be too much circulation out there and too many publications.

MARK McLAUGHLIN: There's such tremendous pressure to collapse the time between cause and effect. As soon as you've got a Web site built that has proven that it can pull people into a relationship and get them to transact, you want to turn on media that pops that traffic right away. Print is probably very good at it, but when you aggregate your audience over a six-week period or a 10-day period, it's harder for us to track and say, "See, we did that and this." We run a burst of television advertising and simply because it happened so quickly, we aggregate all those eyeballs. And a small percentage of them off a very mass base react very quickly - we can demonstrate cause and effect. Whether it's people through the door on Saturday or visits to a Web site, we're having a harder time correlating the investment in print to behavioral change, and it has a lot to do with the way they aggregate their eyeballs.

CHARLIE RUTMAN: Television has a marketplace of supply and demand where there is a finite supply. It's not as easily substitutable. In magazines, it's pretty easily substitutable, and there's no such thing as a sell-out. It's the only medium I can think of that doesn't sell out.

RICH HAMILTON: The magazine medium has always been hurt more in bad times than the other media, and it goes back to this whole issue of immediacy.

McCANN: The shame of it is some of them have intensely active and engaged readers. There was a blurb in Oprah's magazine about some Clinique product, [and after it ran] you couldn't find it. I couldn't find it in Chicago. They have great power.

McLAUGHLIN: The slice of a magazine's circulation that is a passionately involved reader that loves that brand is somebody I want to hitchhike on that relationship and transfer to my brand. A lot of their new metrics have to be around their most loyal people who love their brand and how they get them into a more involved relationship that leads to new products and opportunities. It depends on the category, but a magazine like an Esquire, there are people who are very, very involved, who are tearing pages out - "Gee, I'll try that wine!" You love to get into the middle of a relationship like that, but we're lacking the accountability.

RUTMAN: We talked a lot over the years about appointment viewing, and each magazine has its core audience of appointment readers. Extrapolating that from the casual readers, whether it's price or something else, is critical.

Will the upfront ever change?

RUTMAN: The network upfront is treated almost like an Olympic sport. Yeah, it's an important business proposition, but I'm not sure it's in our clients' best interest when you have people sitting at their company at 4 or 5 o'clock in the morning, eating cold pizza, and trying to make hundred-million-dollar decisions. I'm not trying to shift the balance of power from the seller to the buyer or the buyer to the seller. I would like rules of engagement that make it a more businesslike effort - if there were a way to get an industry working group of buyers and clients and sellers to come up with rules of engagement to make it more civil and businesslike. I don't know another buying and selling interaction that occurs like that.

HAMILTON: I would suggest if that ever happened, the first thing that would happen after that is somebody would break the rules in order to get a better deal. There's been talk about the obsolescence of the upfront for 20 years. We're competing against each other, and the clients are competing against other clients, the agencies are competing against other agencies for limited inventory. The broadcast networks increased their share of the total upfront buy in last year's upfront for the first time in I don't know how many years. Notwithstanding all the stuff you read about television and threats to television and everything else, the demand hasn't gone away. And you're not going to sit in a room and agree with each other about what the ground rules should be, because we're out to beat each other.

MARC GOLDSTEIN: We tend to all think - myself included - about the most recent experience. If you just go back one year earlier, our entire staff left at 5 or 6 o'clock at night, worked normal hours and did the upfront over a period of four to five to six weeks (or even eight weeks if you extend it into cable and syndication), because the marketplace conditions were totally different than they were last year. Granted, last year was an exception, even for us. We have always told the networks that we will do business when it's still light out, and there's no reason to work once the lights have to go on in the office and it's dark outside. I grant you last year was not the case. Last year, we reacted to marketplace conditions. Marketplace conditions in an auction environment were such that the marketplace in prime alone went over $8 billion - virtually a 20 percent increase. Who starts that? How does the avalanche or the snowball effect get started? I don't necessarily have an answer for you, but I would suggest that in a strong marketplace, we're going to see that every single year. Similarly, if the demand isn't there, we're going to see markets like we did two years ago, which are going to be protracted and drawn out.

CAROLYN BIVENS: Until media sellers decide that they will allow the resale of the time after it's initially purchased, the upfront isn't going to change. And I would contend that even if they did allow that, it would make for a much more complicated market. In open market conditions, it would be a little more difficult to value.

GOLDSTEIN: Or if the seller said we're going home at 6 o'clock at night, our doors are closed, we're going to be here again at 9 o'clock tomorrow morning, the inventory is there, the price is going to be the same, you will not lose anything between 6 p.m. and 9 a.m. the next morning, the marketplace could potentially operate differently.

McCANN: What's always struck me is it's not in the networks' best interest to change the mechanism.

What is your most pressing research concern?

McLAUGHLIN: Getting the most value out of your advertising - your marketing efforts that bring people into a brand are tied to the moment you bring them in. We see clients starting to emphasize that more and more. I think the car industry has really started to grasp that if somebody owns a car that's your brand and from your company, you have a tremendous data advantage on keeping that person in the fold for the long term, and if you don't take advantage of that, you're making a very big mistake. The more considered the purchase, the more high-interest it is, and the stronger the brand, the more efficiently you can start to do that.

BIVENS: A marketer that looked exclusively at loyalty marketing regardless of the metrics that are being used would be missing out on a lot of other opportunities. There are better and better metrics that are available now. You can do a lot of the modeling. We've taken some of the things we had in Europe and brought them over here - where you can collect information and do predictive marketing.

RUTMAN: We have a guy in Carat U.K. who helped us get into this communications planning, which is happening in our company more in Europe and certainly the United States. His background is sciences of consumer behavior. His name is Dr. Wayne Fletcher, he's a very interesting guy, and he's moved us ahead quite far in Europe, and it's particularly noticeable on three of our clients. We haven't been able to adopt it here yet in the United States. He comes from a totally different background and has now hired a few people. He's done some work with us in the U.S., but it hasn't come to fruition yet.

GOLDSTEIN: We have done research, our own research, in over 12 markets around the world against the youth market. It is not what they watch or what they read; it is more about their level of expectation. It is more along the lines of how they feel and what they think and what their reactions are, rather than how many people are watching and simply counting - as Nielsen might - the rating points against a particular media type. It's much more into their reactions, how they feel, both positively and negatively. Because you really have got to learn and understand this particular group to be able to reach them.

McLAUGHLIN: We've put account planning and data analysts together. One example of a result of that is with a retailer - the television advertising was targeting the people who represent the great majority of volume. After data analysts shared with the planner a lot of new information about the business, we recognized that a very small slice of traffic represented the majority of profit. And the television advertising was changed to create loyalty amongst a niche group of people who go to that retailer because they pay the premium prices.